Nikkei builds on last week's gains, Italy eyed

Reuters Staff

5 Min Read

* Benchmark trading solidly above 25-day moving average
* Investors await market reaction to Italy's austerity plan
* Financial stocks outperform
* Volume thin
By Mari Saito
TOKYO, Dec 5 (Reuters) - The Nikkei stock average
edged higher on Monday to build on last week's hefty gains,
helped by improved sentiment towards the European debt crisis
although uncertainty about how markets will assess Italy's new
austerity plan capped the upside.
In Europe, Italy's Prime Minister Mario Monti is set to
present his 30 billion euro austerity package to parliament on
Monday, as French and German leaders meet in Paris to hammer out
a proposal for further fiscal integration across the currency
bloc.
"On the face of it, the Italy news doesn't seem bad for
markets, but Japanese investors need to see the reaction of
European and U.S. markets to the plan before they can confirm
that it's good news," said Masayoshi Okamoto, head of dealing at
Jujiya Securities.
"The 30 billion euro amount, is it too much, too little, or
just right? We need to see what the market thinks of it," he
added.
European Union leaders will meet on Thursday and Friday to
seek agreement on a convincing rescue plan. The European Central
Bank will also hold a regular policy meeting on Thursday and is
expected to cut interest rates.
"It's difficult for investors to move right now, with volume
at such a low levels and even with positive data from the U.S.,
all the focus remains on Europe and what happens there," said
Hideyuki Ishiguro, investment strategy supervisor at Okasan
Securities.
The Nikkei rose 0.6 percent to 8,695.98, adding to
its 6 percent gain last week and jumping above its 25-day moving
average of 8,573. The broader Topix also added 0.6
percent to 748.61.
Volume was thin, with 1.43 billion shares changing hands on
the main board, less than Friday's 1.57 billion shares and down
11 percent from the 20-day average volume.
Twice as many shares declined as advancing issues.
FINANCIALS LEAD GAINS
Strategists said one positive technical sign for the Nikkei
is that it is now trading above its 25-day moving average, at
8,563.
The index also briefly broke above 8,700 for the first time
in nearly a month, reaching an intraday high of 8,704.48 shortly
after the open.
Battered Japanese financial stocks continued to bounce back
as the overall market gained.
The securities subindex gained 2.2 percent and
was the top performing sector. It has risen about 10 percent
since hitting a lifetime low on Nov. 24 but is still down 30
percent since July on low trading volumes and as the European
debt crisis prompted investors to flee riskier assets.
Nomura Holdings Inc gained 2.8 percent to 262 yen
and rival Daiwa Securities Group Inc rose 1.6 percent
to 260 yen.
Seven Bank Ltd rose 1.3 percent to 155 yen after
it said on Friday it plans to list on the Tokyo Stock Exchange
on Dec. 26 to broaden its investor base.
Olympus Corp, engulfed in an accounting scandal,
added 2.3 percent to 1,091 yen ahead of a report by a
third-party panel which is expected to be announced on Tuesday.
A source said the firm hid up to $1.7 billion in losses from
its investors, but added that the report is likely to say there
is no evidence of involvement by organised crime in the
cover-up.
"The important point is whether liabilities exceeded assets
during the time they were hiding investment losses," said
Okasan's Ishiguro, adding that the stock was trading at its
upper limit for now.
Another scandal-hit firm, Daio Paper
, jumped 8.1 percent to 587 yen on
reports that it will file its delayed results on Dec. 14,
allowing the tissue paper marker to avoid a delisting from the
Tokyo bourse.
The tissue maker's former chairman, Mototaka Ikawa, was
arrested by prosecutors last month after a third-party
investigation found he had diverted 10.6 billion yen ($136
million) from Daio subsidiaries to his own account.
MatsumotoKiyoshi Holdings rose 3.6
percent to 1,543 yen after Nomura Securities hiked its
recommendation on the drugstore operator to "buy" from
"neutral", citing the company's efforts to improve margins at
its suburban stores.
Fast Retailing Co Ltd jumped 4.5 percent to 13,050
yen after the operator of the Uniqlo clothing chain said on
Friday domestic same-store sales in November fell 1 percent from
a year earlier, an improvement from a 4 percent drop in October.